Raphael Stevens

Starbucks will eliminate the extra charge for dairy alternatives after years of pleading from customers.
In recent months, the coffee giant’s higher prices have scared away some of its occasional customers.
The surcharge can reach up to 80 cents in some markets.

Starbucks offers oat milk as a dairy-free option.
Source: Starbucks

Starbucks said Wednesday that it will remove the surcharge for dairy substitutes, saving some U.S. customers more than 10% on their drinks.
The change goes into effect Nov. 7 and follows years of pleading from customers to eliminate the extra fee, especially as milk alternatives have grown more popular. More recently, Starbucks has seen its U.S. sales fall as its higher prices scare away occasional customers whose wallets have already been stretched by inflation.

“This is just one of many changes we’ll make to ensure a visit to Starbucks is worth it every time,” CEO Brian Niccol said in a statement.
Substituting a nondairy milk is the second-most requested customization from customers, trailing only adding a shot of espresso, according to Starbucks.
The change to its surcharge pricing coincides with the launch of the company’s holiday menu, as well as the discontinuation of the chain’s line of olive oil-infused drinks.
Niccol joined the company in early September after six years as CEO of Chipotle. At Starbucks, he is tasked with leading a turnaround to reinvigorate its business, particularly in its home market. His early strategic focuses include changing the coffee chain’s marketing, simplifying menus and fixing pricing.
The surcharges for dairy alternatives can reach up to 80 cents per drink in some markets. Currently, Starbucks customers can already add up to 4 ounces of a dairy substitute at no extra charge to hot or iced brewed coffee or tea, cold brew and Americano drinks. But other drinks made with milk in the standard recipe, such as lattes, currently have surcharges.

Starbucks first started serving nondairy milk in 1997, when it added soy milk to menus. In 2015, coconut milk landed on menus nationwide, and then came almond milk the following year. In 2021, Starbucks locations across the U.S. began using oat milk.
Recently, PETA has targeted Starbucks for the nondairy surcharges, relying on stunts to call attention to the cause. For example, two years ago, actor and activist James Cromwell, known for his roles in “Succession” and “Babe,” glued himself to the counter of a New York City location. When Niccol joined the company, PETA said it would pause the campaign to give him time to change the strategy.
In March, three lactose-intolerant women sued Starbucks in federal court, alleging that the surcharge discriminated against customers with allergies. The company has been seeking to dismiss the case. The next scheduled court appearance is Nov. 6, according to court filings.
Starbucks declined to comment on the suit, citing the company’s policy against discussing pending litigation.

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Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook. 
Investors are expecting that Niccol will share more details about his turnaround strategy during the company’s conference call, scheduled for 5 p.m. ET.

Brian Niccol speaking on CNBC’s “Squawk Box” on Oct. 30, 2018.
Anjali Sundaram | CNBC

Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations as sales in the U.S. and China, its two biggest markets, disappointed.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook. 

This report marks the first under CEO Brian Niccol, who joined the company on Sept. 9 to revive the floundering business. 
“It is clear we need to fundamentally change our strategy to win back customers,” CEO Brian Niccol said in a statement. “We have a clear plan and are moving quickly to return Starbucks to growth.”
Niccol outlined a multipart plan to improve the company’s U.S. business immediately. Many of the steps address a new goal for Starbucks: hand delivering a customer’s drink in under four minutes. Roughly half of current transactions are within that threshold, according to Niccol.
Cafes will bring back the condiment bars that disappeared behind counters during the pandemic, get rid of extra charges for milk alternatives and cut back menus. Niccol also told investors that he wants to bring “order to mobile order and pay” and improve restaurant staffing.
“I’m very optimistic, despite the near-term challenges,” Niccol said. “I believe we have significant strengths, a strong, enduring brand. We have a clear plan. We’re going to be moving quickly.”

For now, the strategy is focused on North America. Niccol said he’d need to spend time in China to better understand the company’s operations and the market before deciding how to revive sales there.
In fiscal year 2025, Starbucks also plans to cut back on new cafes and renovations. CFO Rachel Ruggeri said the shift is to “accommodate a redesign” across its locations and free up capital to spend on the broader turnaround.
Shares of the company were flat in extended trading on Wednesday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 80 cents vs. $1.03 expected
Revenue: $9.07 billion vs. $9.36 billion expected

Starbucks reported fiscal fourth-quarter net income attributable to the company of $909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, a year earlier.
Net sales dropped 3% to $9.07 billion. 
The company’s global same-store sales fell 7%, fueled by weak demand in the U.S. and China. Traffic to its stores worldwide fell 8% during the quarter.
The company’s U.S. restaurants reported same-store sales declines of 6%, fueled by a 10% tumble in traffic.
In China, the company’s same-store sales plummeted 14% as both traffic and average ticket fell. Starbucks has been facing greater competition from local rivals, such as Luckin Coffee, which can undercut the company’s prices.

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Carvana raised its 2024 earnings guidance, saying it would be “significantly above the high end” of its previous target.
The online used-car retailer easily beat Wall Street’s estimates for earnings and revenue.

A Carvana sign and signature vending machine in Tempe, Arizona.
Michael Wayland | CNBC

Carvana on Wednesday raised its 2024 earnings guidance after the online used-car retailer significantly topped Wall Street’s third-quarter expectations.
Here’s how the company performed in the third quarter, compared with average estimates compiled by LSEG:

Earnings per share: 64 cents vs. 25 cents expected
Revenue: $3.65 billion vs. $3.45 billion expected

The company’s stock rose roughly 20% in after-hours trading Wednesday.
For 2024 guidance, Carvana said its adjusted earnings before interest, taxes, depreciation and amortization would be “significantly above the high end” of its previous target of $1 billion to $1.2 billion. The company reported $339 million in adjusted EBITDA last year.
Carvana’s new guidance signals expectations for a strong end of the year. The company said it expects a sequential increase in retail vehicle sales during the fourth quarter compared with the prior three months, which totaled 108,651 vehicles.
For the third quarter, the company’s net income was $148 million, down from $741 million a year earlier that was inflated by a gain on debt reduction. Adjusted EBITDA was $429 million and adjusted EBITDA margin was 11.7%, both topping company records achieved during the second quarter.
The company’s third-quarter 2023 results included adjusted EBITDA of $148 million and revenue of $2.77 billion.

Shares of Carvana are up roughly 300% this year as the company restructured operations and cut costs following Wall Street concerns of bankruptcy for the company in late 2022.
Carvana stock closed Wednesday at $207.31 per share, down less than 1%. Shares hit a new 52-week high earlier in the day of $213.98 per share.

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All doses of Novo Nordisk’s weight loss injection Wegovy and diabetes drug Ozempic are now available in the U.S., according to an update on the FDA’s drug shortage database.
It is a sign that Novo Nordisk’s efforts to ramp up the supply of those drugs are starting to pay off, as demand continues to skyrocket in the U.S.  
The update raises the potential of the FDA to remove the blockbuster injections from its shortage list entirely, which could prevent compounding pharmacies from making customized and often cheaper versions of those branded drugs.

Packages containing syringes of the medications Wegovy, Ozempic and Mounjaro at a shop in Mitte, Germany, July 11, 2024.
Picture Alliance | Picture Alliance | Getty Images

All doses of Novo Nordisk’s highly popular weight loss injection Wegovy and diabetes drug Ozempic are now available in the U.S., according to an update on the U.S. Food and Drug Administration’s drug shortage database Wednesday. 
It is a sign that Novo Nordisk’s efforts to ramp up the supply of those weekly drugs are starting to pay off, as demand continues to skyrocket in the U.S.  

A previous update said the lowest dose of Wegovy — 25 milligrams — was still in short supply.
Several doses of semaglutide, the active ingredient in Wegovy and Ozempic, have been on the FDA’s shortage list since early 2022. 
Wednesday’s update raises the potential that the FDA might remove the blockbuster injections from its shortage list entirely, which could prevent compounding pharmacies from making customized and often cheaper versions of those branded drugs.
In a statement, Novo Nordisk said all doses of Wegovy and Ozempic are being shipped regularly to wholesalers. The Danish drugmaker said the FDA’s update is a result of the company’s significant investment in expanding manufacturing capacity and “ongoing communication” with the agency. 
Still, Novo Nordisk said patients may not always be able to immediately fill their prescriptions at a particular pharmacy, even when a medication is listed as available. 

“Our intentional approach to gradually increase supply into the U.S. market is working,” Novo Nordisk said. “We will continue to prioritize continuity of care for patients, closely monitoring market dynamics and prescribing trends along the way.”
It comes a week after Novo Nordisk asked the FDA to prevent compounding pharmacies from making unapproved versions of Wegovy and Ozempic, arguing that the medications are too complex for those manufacturers to make safely. 
Earlier this month, the FDA removed tirzepatide, the active ingredient in Eli Lilly’s weight loss drug Zepbound and diabetes treatment Mounjaro, from its shortage list. But a trade group representing some compounders sued the FDA, which led the agency to say it will reconsider its decision to remove tirzepatide from its shortage list. More

Eli Lilly’s blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro posted weaker-than-expected sales for the third quarter, even as both medicines have largely recovered from widespread shortages in the U.S.
The drugmaker blamed the misses on drug wholesalers cutting inventory of Zepbound and Mounjaro.
Eli Lilly executives insisted that underlying demand for the medicines remained strong and that the company has enough supply available.

An Eli Lilly & Co. Zepbound injection pen arranged in the Brooklyn borough of New York, US, on Thursday, March 28, 2024. 
Shelby Knowles | Bloomberg | Getty Images

Eli Lilly’s blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro posted weaker-than-expected sales for the third quarter, even as supply of both medicines has largely recovered from widespread shortages in the U.S. 
The reason for the disappointing sales, according to the company, is not an issue of demand or supply. 

During an earnings call Wednesday, Eli Lilly instead blamed it on drug wholesalers cutting inventory of Zepbound and Mounjaro. Wholesalers purchase medicines from manufacturers and sell them to hospitals, clinics, pharmacies and other health-care providers.
Supply increases allowed Eli Lilly to fulfill back orders for wholesalers in the second quarter, which led to increased inventory of Zepbound and Mounjaro during the period, according to the pharmaceutical giant.
But those wholesalers tapped into some of that existing stock in the third quarter instead of buying more from the company, which dampened revenue from both treatments, Eli Lilly said. 
Mounjaro’s third-quarter sales of $3.11 billion fell well short of the $3.7 billion analysts had expected, according to estimates compiled by StreetAccount. Sales of Zepbound were $1.26 billion in the quarter, missing the $1.76 billion expected by analysts. 
“The primary culprit was an inventory hit to Mounjaro and Zepbound … not weaker demand,” Citi analyst Geoff Meacham wrote in a research note Wednesday. 

Jared Holz, Mizuho health-care equity strategist, wrote in an email that “destocking” — or selling existing inventory for the drugs rather than stocking up on more — came as a surprise, especially with the high level of demand for the treatments.
But he said Eli Lilly has invested $10 billion to $15 billion to expand manufacturing capacity for its injectable drugs in this year alone, which should “help to reverse some of the trends reported in this period.”
Still, some analysts question whether the inventory issue can explain all of what happened with the sales of Zepbound and Mounjaro in the third quarter. That factor likely explains “only a fraction,” or around 20%, of the drugs’ revenue misses, Barclays analyst Carter Gould wrote in a note Wednesday. 
Demand for weight loss and diabetes injections has outpaced supply over the past two years. 
But Eli Lilly’s supply woes began to ease earlier this year, and the Food and Drug Administration removed tirzepatide, the active ingredient in Mounjaro and Zepbound, from its shortage list.
Earlier this month, a trade group representing compounding pharmacies, which make customized and often cheaper alternatives to branded drugs in shortage, sued the FDA. The group said tirzepatide is still in short supply and should therefore remain on the shortage list, which led the agency to reconsider its decision.
On the earnings call, Eli Lilly executives insisted that underlying demand for the medicines remained strong. 
“Is there a demand problem? No,” Eli Lilly CEO Dave Ricks said, pointing instead to “a lot of lumpiness in channel stocking.”
“I think what we really don’t control and don’t attempt to but as a reality is that downstream customers from Lilly, wholesalers and retailers, are making their own decisions about which of the 12 different dosage forms they want to stock in at what level,” Ricks said. 
He noted that wholesalers are dealing with some limitations, including financial pressures. They also have to deal with “cold chain” capacity constraints, or maintain a temperature-controlled supply chain that ensures the quality of the drugs from production to delivery. 
Ricks said Eli Lilly had yet to begin what the company calls “demand-stimulating activities,” or advertising and promoting, for Zepbound. The drugmaker will start those efforts in November, he said.
That will include providing drug samples to health-care providers. 
Eli Lilly is also investing heavily in its direct-to-consumer website, which offers telehealth prescriptions and direct home delivery of certain drugs to expand patient access, executives said during the call. 
Ricks dismissed the idea that the disappointing sales in the quarter was due to competition from compounded versions of Mounjaro and Zepbound. 
“We don’t really see a financial impact on Lilly of compounding,” Ricks said. More